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News
Of The Note/Cash Flow Business For Brokers & Investors |
, Is it really possible to make money in non-performing (defaulted) notes? In this issue Dean Engle continues his series by telling you about some actual deals he's done recently.
Given the number of foreclosures and resultant non-performing notes available, I think this area is one of the very best opportunities today for note investors and brokers.
To get on the fast track, plan to be in Denver Sept. 17-19 for "Note Summit 2: The Deals -- Funding & Managing Discounted Bank Notes." Dean has put together a full 2-day program on how individual investors, buying groups, and people looking to raise private money to buy non-performing notes can create and manage their own note fund.
You'll meet a lot of people who are successfully buying and re-selling non-performing notes -- who knows what networking and partnership opportunities that may create for you?
I plan to be there as well, sharing ideas and hosting a brain-storming discussion of both non-performing and performing notes.
The specific goal of this intensive two-day event is for you to walk out on Sunday feeling confident that you can manage a note fund,
get investors to back you, and have the tools and relationships you need
to thrive.
Dean tells me that he's almost at full capacity for the event, so if you plan on going, you should register now, especially since he's still offering DVDs of the previous Note Summit and a complimentary spouse/business partner ticket with every ticket purchased.
To find out more about the program, and to view a recent webinar Dean and I did on his "9 Step Note Investor's Blueprint," go to http://www.notebuyingprofits.com/fund-manager-replay.html
I hope to see you in Denver!
Cheers,
P.S. I've arranged a $100.00 discount to the Note Summit for you. When you register, use discount code webns2 at http://snipurl.com/denvernotes
If you attend, please introduce yourself -- and join me for a private brainstorming session on Friday afternoon.
IS THIS FOR REAL? OH, YES!
SOME DEALS I'VE RECENTLY DONE
by Dean Engle
Case Study
#1: Memphis, TN
Quick Stats:
Initial
investment: $500 for a $32,833 1st mortgage
Net profit after expenses: $5,600
Total
hold time: about 150 days
In late 2009 I bought one
of these bad notes, secured by this house in
Memphis, Tennessee, for $500...yes, $500! (By the way, I really like
buying lower-balance notes because we don't risk as much money on a
single investment, and the payoffs
can be excellent--and for beginners, this is a great
way to get started
without much cash.)
We soon found out that the son of the borrower was living in the house,
and we did a $1,000 "cash-for-deed" deal with him
that left the house vacant and in our possession. We immediately listed
the house for sale, and in less than 60 days the house sold for $9,000,
netting us just over $8,200 in proceeds.
Case Study #2: Cave
City, KY
Quick Stats:
Initial
investment: $1,200 for a $12,000 2nd mortgage
Total profit after expenses: $11,200
Total hold time: about 60 days
We purchased this 2 nd
position note for $1,200 on November 9, 2009 on an
owner-occupied house in Cave City, KY. The unpaid balance of the note
was $12,000, the balance of the 1st mortgage was about
$15,000, and the house was worth about $35,000.
Since it was right
around the Holidays, we didn't do anything
with this deal
for several weeks other than inform the borrower that we were the new
investor on the note. Then
on January 6th, our
servicer emailed to tell us that the borrower had paid the note in full
as
part of a new mortgage on December 24th. OK,
that was easy...
That's a quick $11,200 profit
on a $1,200 note purchase.
Case Study
#3: Clovis, NM
Quick Stats:
Initial
investment: $3,125 for a $62,000 1st mortgage
Net profit after expenses: $9,000
Total hold time: about 75 days
Here's a deal from January, 2010. We bought a note
secured by a vacant house
in Clovis, NM, for $3,125 on an unpaid balance of $62,000. Within 5
days
of receiving a letter from our servicer, the borrower called us to say,
"I don't
want anything to do with this house; please just take it off my
hands."
So, we set up a meeting with him, sent a mobile notary to document that
he was
signing over the deed to us, and he's happy because we just
helped him get rid
of his headache. Bottom line: the borrower signed over the deed 2 days
after he
called us.
In cases like this, we sometimes offer a "cash for keys" payment to a
borrower to
encourage him/her to sign over the deed, but in this case, all he
wanted in
exchange for the deed was our assurance that we wouldn't take
further action
against him. Done.
Oh,
and during that meeting with the notary, the borrower
mentioned that his neighbor might want to buy the house. We then
contacted the
neighbor, who offered $13,000 on the spot, and we countered with
$15,000, which he accepted. We closed within 30 days. Total
hold time: less than 90 days
That's a $9,000
profit on a $3,125 note purchase.
Case Study #4: Fort
Worth, TX
Quick Stats:
Initial
investment: $23,500
Net profit after expenses: $7,500
Total hold time: about 50 days
Here's one more example of a simple deal: We purchased a note
for $23,500 on February 5th, 2010 that was secured by a house in Fort
Worth, TX. The interesting thing about the deal (that we discovered
AFTER we bought the note) was that there was a lender-authorized short
sale already in progress. We decided to honor the terms of the short
sale, and we cashed out of the note in less than 60 days when the
property was sold for $31,000.
This
wasn't a huge deal,
but the nice thing about the $7,500 profit was that it was
quick and easy.
Case Study
#5: Oakland, CA
Quick Stats:
Initial
investment: $7,000 purchase of a $302,000 1st mortgage
Net profit after expenses: $15,000
Total hold time: about 30 days
A
final example to mention is one with exciting implications for note
buyers. We purchased this note on December 15th, 2009, secured by
this "ugly" house in Oakland, CA. Since Oakland is a hotbed of
auction buying, we did a little research and contacted the "usual
suspects" at the local Alameda County auctions, asking them if they
were
interested in buying the note on a vacant house that was headed to
auction. One was, and we closed on January 14th, tripling our money in
30 days.
Disclaimer:
the FTC mandates that all case studies like this
be clearly labeled as "atypical" because they
rightfully don't want us to
suggest that every deal, every time, works out this well. Just remember
this: there's
no such thing as a typical note
deal. Results depend, among
other things, on the quality of information
received before the note purchase, the actual pricing, the degree of
cooperation provided by the borrower, local market conditions, luck,
and
possible legal factors such as bankruptcy. You
may actually lose money buying notes.
Dean Engle was a Fulbright Scholar who also ran food distributions in
refugee camps in Rwanda. Currently
he is an avid rock climber and a partner in a discounted bank
note investment fund. Dean also trains people how to to
find, fund, bid, close and exit discounted bank note deals. Learn more at
http://www.notebuyingprofits.com/fund-manager-replay.html
China...Iran...Colombia...North Korea...Sudan...
and so many more captive people in need of God's Word...
You can send a Bible to someone who desperately wants one!
Visit Bibles Unbound, a ministry of Voice of the Martyrs, and learn
how you can become a Bible Mailing Missionary:
www.BiblesUnbound.com
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